Fidelity China Special Situations (FCSS)

Fidelity China Special Situations (FCSS) has delivered exceptional near-term Performance, capturing all of the recovery in the country’s equity market in the past year, and more, leading to long-term outperformance of both the market and peer group.

Manager Dale Nicholls has not rested on his laurels and instead responded to the changing backdrop by tweaking the portfolio, taking profits from high-performing areas, and adding where he thinks there is value. Consumer-focussed names have been one area Dale has found opportunities, as well as companies that have become global leaders in their industries. The Portfolio continues to have a notable small- and mid-cap bias which not only offers differentiation but has allowed stock selection to be the primary driver of returns.

Gearing remains a key feature and will have contributed to performance in the market rally. As this has gone on, Dale has reduced the trust’s gearing, although it still has the highest level in the three-strong peer group.

The past year has seen a big increase in the trust’s Dividend of 25%, resulting in yield of 2.5%, as well as a special dividend for the first time in the trust’s history. This was a result of strong underlying revenue generation and one large stock payout, and has also enabled revenue reserves to increase notably.

Despite the strong performance and improving outlook, the trust continues to trade at a c. 10% Discount to NAV, wider than its own five-year average. The board has continued to undertake share buybacks to help narrow this.

The trust was awarded Kepler’s Growth Rating for 2025.